Filing for divorce can be stressful enough but when your spouse decides to file for bankruptcy as you’re trying to get the fresh start you deserve, it can be even more hectic. Bankruptcy can impact your divorce and the distribution of your assets, and create hassles that may not otherwise be present in your divorce. Knowing how to handle your spouse’s bankruptcy throughout the divorce process can help you keep things on track. Here’s what your New Jersey divorce lawyer wants you to do as soon as you learn about your spouse’s bankruptcy.
Speak With Your New Jersey Divorce Lawyer Immediately
The first thing you should do after learning that your spouse is filing for bankruptcy is to speak with your New Jersey divorce lawyer. They’ll be able to review your situation and your assets to help you protect the items that are rightfully yours and reduce the risk of the bankruptcy court using your assets to settle your spouse’s debts.
Again, the sooner you can speak with your lawyer, the better. By waiting to let them know what’s going on, you put your assets at risk and could end up losing property that you deserve to keep.
Be Prepared for Delays
When your spouse files for bankruptcy, the filing triggers what’s known as an automatic stay. The automatic stay is designed to stop creditors from pursuing repayment until the bankruptcy is settled. But when bankruptcy happens during a divorce, it can also halt the divorce court’s ability to divide assets. This can create delays in the finalization of your divorce. You may need to wait until your spouse’s bankruptcy is settled to divide any remaining property not used to settle their debts.
Create a Clear List of Joint and Individual Property
Unfortunately, joint assets are partially your spouse’s, and that means the bankruptcy court may be able to use them to settle your spouse’s debts. Take the time to compile a list of assets that are solely yours, assets that are jointly owned, and assets that are solely your spouse’s. This can give you a better understanding of your financial situation as you move into your divorce proceedings.
Understand How It Impacts Equitable Distribution
Your spouse’s divorce may impact the equitable distribution of your joint assets. Why? Because those assets may be used to settle your spouse’s debts. This is why working with an experienced divorce lawyer is so important. They’ll be able to identify which assets are at risk and may be able to represent your interests with the court.
Keep in mind that if your joint assets are seized by the bankruptcy court and used to settle your spouse’s debts, your divorce settlement may be smaller than it should be. Unfortunately, bankruptcy typically takes priority over divorces, and your spouse’s creditors will likely receive priority over you.
Know What Types of Debt Can Be Discharged
If your spouse files for bankruptcy in the hopes of getting out of paying alimony or child support, they won’t be able to. These debts are not forgivable through bankruptcy, but they may be asked to pay a smaller amount depending on their finances after the bankruptcy is settled. Your divorce attorney will help you present the strongest case possible to increase the chances of you getting the payments you need to adjust to your new normal.
Let Carvajal Law Help
If your spouse files for bankruptcy during your divorce, it can complicate the rest of your divorce proceedings. The more complex your divorce proceedings are, the more essential it is that you work with an experienced New Jersey divorce lawyer. At Carvajal Law, our team will work to represent your interests and help you get the best possible settlement, even if your spouse files for bankruptcy. Contact us today to schedule a free consultation.